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May 2016: FCA wins, Ford and GM stumble on weak car volumes

The May 2016 sales numbers are in, and it looks as though FCA is getting some vindication for boldly cancelling two slow-selling car models. Meanwhile, Ford saw overall sales dip and GM's May volume took a big dive versus the same month in 2015. While Marchionne's decision to axe the Chrysler 200 and Dodge Dart has drawn criticism as being short-sighted, it's working for FCA so far. Although the Dart and 200 aren't out of production yet and no capacity has been shifted to crossover or trucks, May's numbers show that the emphasis on Jeep and Ram models makes sense right now. FCA's US sales rose 1 percent last month compared to May 2015, putting the year-to-date total at 955,186 vehicles, an increase of 6 percent compared to the same period last year. Standouts included the Jeep Renegade, Compass, and Patriot, and the Fiat 500X. Ram pickup sales were down 3 percent. And your fun fact is that Alfa Romeo sales were up precisely 10 percent, for a total of 44 4Cs sold versus 40 in the same month last year. At FoMoCo, the Ford brand took a hit to the tune of 6.4 percent from May 2015 to 2016, registering 226,190 sales last month. Lincoln showed improvement on its modest numbers, going from 9,174 to 9,807, a 6.9 percent increase. Overall, Ford was down 5.9 percent for the month to 235,997; despite the slump, year-to-date total Ford sales are up 4.2 percent to 1,112,939. Strong sellers included Escape, Expedition, F-Series, and Transit - big stuff. Most small and/or efficient models (Fiesta, Focus, Fusion, C-Max) saw sales slides. Fusion sales were also down, likely due to effects of model changeover to the freshened 2017 model. Ford has promised four new crossovers and SUVs by 2020 and if things keep trending this way the company will be able to sell them, but things could change in the next four years. GM saw the worst of it for domestic brands. Retail and fleet sales were down for each of the four divisions, with the May 2016 total dropping 18 percent to 240,450 vehicles. GM's year-to-date sales are down 5.0 percent in 2016 to 1,183,705. Both the Sierra and Silverado were down significantly, and the majority of Chevy, Buick, GMC, and Cadillac nameplates saw sales decreases, with both small cars and larger utilities included. Not even big stuff could help GM this month, it seems. We'll have more on the rest of the industry's May sales as those figures trickle in.

Detroit 3 and UAW set for showdown over tiered wages

This week, thousands of United Auto Workers will converge on Cobo Center in Detroit for the Special Convention on Collective Bargaining, an every-four-year event that lets members tell UAW leaders what the negotiating priorities should be during contract negotiations. This is where a lot of sand and a lot of lines start coming together in preparation for contract negotiations between the UAW and the Detroit 3 automakers, which will happen later this year. Number one on the UAW agenda is the end of the two-tier wage system created in 2007 to help the automakers get through bankruptcy; veteran workers are paid the Tier 1 rate of around $29.00 per hour, new hires are paid the Tier 2 rate of between $15 and $20 and get about half the benefits of Tier 1. Tier 2 hiring has been an undoubted success for the automakers, allowing them to keep factories in the US and hire more workers. By agreement, it is capped at a certain percentage of each automaker's workforce, and while the union's ultimate position is to get rid of the dual-scale system entirely; one leader said Ford could easily afford the $335 million it would take to convert all its workers to Tier 1 out of its $6.9 billion in 2014 North American profit, and General Motors could do the same out of the $5 billion it is handing to investors through the (admittedly forced) share buyback. Other delegates say that at the very least they'd be happy with enforcement of the current caps in the new contract. The automakers, conversely, would welcome expansion of the Tier 2 ranks. Including benefits, import automakers pay workers "in the high $40 range" per hour, according to an analyst, while Ford and GM pay about $59 in wages and benefits per hour. More Tier 2 workers on the rolls would let those two companies get labor cost parity with the competition. Fiat-Chrysler pays wages closer to the imports because of special exceptions in its UAW contract that allow unlimited Tier 2 hiring; those exceptions will end on September 14 and bring FCA into line with the other domestics, unless the new contract maintains them. FCA CEO Sergio Marchionne is opposed to the two-tier system, having called it "almost offensive." One analyst says the UAW might win a sizable pay raise for Tier 2 and a small increase for Tier 1, but the keystone issue will be how the hiring matrix can help the automakers keep overall wages in line with the imports.

Ford recalling nearly 24,000 Focus EV and C-Max models over door chime

Ford will be voluntarily recalling 23,830 Focus Electric and C-Max Hybrid and Energi models equipped with push-button ignition, according to The Detroit News. Why? Because the cars don't make a noise when the driver's door is open, and are therefore in violation of federal regulations. It's not as silly as Honda's badging recall that isn't a recall, but it's close.
Actually, that's not exactly fair. The chime is supposed to come on when the driver's door is open, as it reminds drivers not to leave their cars on or leave key fobs in the car, an easy thing to forget when the cars in question make virtually no noise at idle and do not require keys in ignitions.
The recall, which Ford is conducting voluntarily, covers 2012 and 2013 Focus Electric hatchbacks and 2013 C-Max Hybrid and Energi models. The overwhelming majority, around 22,900 units, were sold in the US, while the remaining 900 units are in Canada. How many of each model are covered in the recall is not immediately clear.